Business and consumer confidence plunged following the escalation of the Middle East crisis, reflecting renewed pessimism amid domestic and global economic uncertainties, the Bangko Sentral ng Pilipinas (BSP) reported.

Based on its latest Business Expectations Survey (BES), the March business confidence index (CI) fell sharply to -24.3 percent—a 32.5-percentage-point drop from 8.2 percent in February—which the central bank attributed to lingering concerns over the Middle East conflict. A negative CI indicates that more respondents are pessimistic than optimistic. The quarter-ahead CI also declined significantly to -17.3 percent from 37.4 percent in the previous survey.

“Philippine business confidence for March and the next quarter declined on concerns that rising fuel costs due to the Middle East conflict will dampen consumer spending,” the BSP said.

The central bank added that the 12-month economic outlook also weakened, dropping to 11.7 percent from 51.1 percent, due to “uncertainty over heightened geopolitical tensions in the Middle East and persistent inflationary pressures.”

Investor sentiment had already weakened last year as the flood control scandal dragged economic growth below target, with the business CI slipping to just 0.9 percent in January. In response, the BSP’s Monetary Board approved two rate cuts in December 2025 and February 2026 to support economic activity and restore confidence.

“The pace of economic recovery will depend on how quickly confidence returns,” BSP Governor Eli M. Remolona Jr. said following the February rate cut, noting that business and consumer sentiment played a key role in the Board’s decision to ease policy twice in three months.

However, the escalation of the Middle East conflict early last month has intensified inflationary pressures, particularly through elevated fuel prices and transport costs. Inflation—another key factor in the BSP’s policy decisions—rose by 1.7 percentage points in March, prompting the central bank to hike rates by 25 basis points on 23 April, effectively reversing its February cut.